Economics often boils down to a lot of smoke and mirrors. Take the case of Abenomics. People are touting Shinzo Abe's economic policies as a great success, mainly because they cater to the No. 1 prevalent prejudice-that printing money is the solution to any economic slowdown.
The results of these policies, however, are not that clear. In fact, the data generated since he became prime minister in December 2012 does not point in that direction.
When Abe became prime minister, the rate of growth of Japan's GDP had been declining for several decades in a row.
Moreover, in the last few months the country had been experiencing a decline in exports, which had been the economy's engine of growth since its industrialization in the late 19th century.
Abe promised to reverse these trends. His plan was simple: Go back to export-driven growth by accelerating monetary printing, which would depreciate the currency, which would in turn make Japanese exports cheaper. Abe's plan had another advantage: The additional monetary printing would also increase domestic demand, which in turn would increase domestic production.
Almost everybody applauded. Quite an idea! Although not very original. Currency debasement has been used since times immemorial. Abe was not aiming at being original, but effective.
Source: NewsOnJapan
